Item — HN Reader

> Where redistribution runs vertically and broadly, the welfare state absorbs global finance shocks...

If this was true, then the Eurozone crisis would not have been as severe as it was in Portugal, Spain, Italy, Greece, and France - all countries with broad and large social assistance programs.

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Also, the HN title is editorialized, the correct title is "Who the welfare state protects shapes a country’s financial openness"

3 comments

The crisis was largely artificially engineered because Germans believed that Southern Europeans were "lazy" and needed to be made an example of.

The ECB could have brought government bond yields down from the beginning and most of the problems could have been avoided.

Did anyone say lazy? I think the attitude was more like "irresponsible": Taking on debt with no hope of paying it off.

Money is debt. It can't be ever paid off, it has to constantly increase. Just look at the us public and private debt. It almost always only increases.

And are the Germans wrong?

Yes the Germans were wrong. Artificially low interest rates were won with the switch to the Euro, and German and French banks were the lazy careless agents, not the Greek Hotels chain or Italian restaurant taking on the cheap money under the false assumption pushed by same banks that the 2000's would be an era of ever growing prosperity and European integration.

>The ECB could have brought government bond yields down from the beginning and most of the problems could have been avoided.

Is that sustainable? Argentina's predicament is basically caused by a variant of this. The Peronists gave handouts to buy votes, funded by money printing (ie. "The ECB could have brought government bond yields down"), but that has consequences and turned Argentina into an economic basket case. Of course, you might argue the EU doesn't have this problem because it's stronger economically and other states can prop them up, but that begs the question, why should member countries like Germany fund Southern Europeans's fiscal profligacy?

sorry but whatever Ger/FRA doing right now is %100 not sustainable. Future growth potential is so bleak and so low chance, along with population crisis, aging natives too. They literally need miracle, like one that exist in stories

Germany and France will pull thd other European countries down worh them.

That populist narrative was popular on social media, but the truth is the exact opposite.

Germany had relatively reasonable debt and government spending relative to taxes.

Italy had entirely dysfunctional spending and Greece was essentially a house of cards built on fraud. Without the Eurozone, Greece would have faced bankruptcy and/or hyperinflation, but instead they got bailed out by the rest of the EU.

Check out Michael Lewis's book Boomerang that covers the distinct problems Iceland, Ireland and Greece faced. The TL;DR on Greece is a country with massive social spending and tiny tax receipts, that took out massive and entirely unsustainable debt thanks to the other Euro countries and then inevitably was unable to pay it back.

Germany was the hero who saved the EU from complete implosion, but instead of being thanked they get misplaced anger for being the only responsible ones in the room.

classic generalization: no one I know blames all Germans, but they do blame specific banks and even individuals who profiteered and allowed the conditions for the crash to develop

surely buying bonds will save you when you are running 8% yearly deficits to buy votes with welfare payments

There's no natural law saying that budgets have to be balanced. Most countries run constant deficits.

Are you serious about this?

Governments being able to borrow money (to run that deficit) relies on people believing that they will be paid back. The more the debt grows, the less likely people are to believe they’ll get paid back.

The other option is endlessly printing money, which causes hyperinflation and you get an Argentina/Turkey/Weimar Republic situation.

The author writes for Jacobin.

Of course it’s promoting Communism.

Stop the hyperbole. Jacobin is more like social democrat (what most nominally social democrat parties used to do, but aren't doing anymore). That's about two significant notches less communist than communism.

>Jacobin is more like social democrat

they always tell you who they really are: look up les jacobins in the French revolution.

Two tiny notches.

One is a dictatorship (well that is how it turns out every time), the other is a democracy, for starters. If that is not a huge difference to you...

> Jacobin is more like social democrat

”The goal of socialism is Communism.” - Lenin

It’s always sold as “a little bit of socialism.”

Every country, every time in history.

The author of this transparent propaganda is a student in a college. When I was his age, I was a socialist too. It’s just youth and inexperience.

Fun fact: The 2008 financial crises resulted in the US bailing out foreign banks more than domestic ones. They prevented a larger Eurozone crisis, because it would have brought down the US, too.

That is the HN title?

I believe that it was changed after the comment you have replied to was posted.